The original RAC demonstration program was authorized by Congress in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA) as a way to find overpayments and underpayments in Medicare fee-for-service reimbursements to healthcare providers. What began as a demonstration program in 2005 in CA, FL, and NY (the states with the largest number of Medicare claims) expanded into MA, SC, and AZ in 2007. The demonstration program identified almost $1 billion in improper payments. Four permanent RAC contractors (assigned by geographic regions) were named, and a national rollout plan was put in place to have all states under the RAC program by 2010.

The impact of this program has wide-ranging implications for all healthcare providers – including behavioral healthcare programs receiving Medicare funding.